Home Loan To Get More Expensive As Housing Finance Companies Raise Lending Rates

Major lenders like HDFC, PNB Housing Finance have raised their home loan ratios by up to 20 basis points (bps) and 25 bps respectively. This move has made home loan rates more expensive. PNB Housing Finance’s revised home loan interest rates now range from 8.4% to 11.75%. Meanwhile, HDFC’s home loan interest rates now range from 8.4% to 8.7%.

State Bank of India (India’s largest lender) have their home loan rates between 8.5% to 8.9%. Private sector ICICI Bank’s range from 8.45% to 10.2%. Home loan rates of Indiabulls Housing Finance has also been raised up to 20 bps, and their loan rates start from 8.45%.

Liquidity pressures have increased the cost of funds for the housing finance companies. HFCs have said that their loan rate hike is a transmission of their cost rise. The cost of funds have gone up, so the lending rates have increased. The hardening of yields has severely affected the cost of funds, due to borrowing from the bond market.

The RBI has maintained a status quo on the repo rate. The increase in rates is different for different categories. For home loans over Rs. 30 Lakh, rates have been raised by 20 bps, while rates for home loans below Rs 30 lakh have been hiked only by five bps, considering affordable housing has been conferred an infrastructure status by the government in Budget 2017. Loans over Rs. 75 Lakh will cost 8.70%, cost of home loans between Rs. 30 lakh and Rs 75 lakh will rise to 8.60% from the current 8.40%. Loans below Rs. 30 lakh will now cost 8.45% from the previous 8.40%. In all these slabs, however, women borrowers will enjoy a rebate of five bps.

While liquidity has been on the uptick, it’s not having any impact on home loan rates. The borrowings are based on long-term or medium term. Experts have predicted that the rates will remain stable for the next upcoming six months. Loan rates will be influenced by international market conditions and oil prices. Many of them don’t trust the RBI policy, so there is no scope for a rate hike.